Question 2 (15 marks)

No words allowed, only a diagram with annotations

Suppose beer and peanuts are complements. In anticipation of warm weather conditions, Injabulo Breweries, the brewers of Number One beer, increased the production of Number One beer. Show on a diagram how this will affect the market for peanuts. Indicate how the equilibrium price and equilibrium quantity of peanuts will change. The direction of any changes should be indicated using arrows.

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Question 3 (13 marks)

Maximum word count: 250 words

The rate of installations of solar energy systems has significantly decreased in the residential market segment over the past three months, during which there has been no load shedding, compared to the same period last year. According to the South African Photovoltaic Industry Association (SAPVIA), which represents about 800 companies in the solar energy sector, there has been a notable decrease in demand for such solutions this year due to the consistent electricity supply and unusually warm winter conditions. Meanwhile, SAPVIA members are receiving stock ordered in anticipation of continued high demand due to load shedding and the winter season.

Explain how the market for solar energy systems is affected by these changes. Clearly indicate the effect on the equilibrium price and equilibrium quantity of solar energy systems. You should use a combination of diagrams and written explanations in your answer.